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AM Best Comments on First American Financial Corporation’s Receipt of a Wells Notice

·3 min read

AM Best has commented that the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a" of the members of First American Title Insurance Group, and the Long-Term ICR of "bbb" of the parent holding company, First American Financial Corporation (First American) (Delaware) [NYSE: FAF], with stable outlooks, remain unchanged, following the company’s announcement that in September 2020, First American received a Wells Notice from the enforcement staff of the Securities and Exchange Commission in connection with the company’s disclosures in late May 2019 concerning the information security incident disclosed by the company at that time, and the adequacy of the company’s disclosure controls in connection with those disclosures.

This release is in follow up to this regulatory action and AM Best’s comments published on May 31, 2019, as well as follow-up discussions with management. First American has responded to the Wells Notice and believes that the company’s disclosures and disclosure controls were in compliance with the securities laws and that an enforcement action is inappropriate. The company also believes that the outcome will have no material adverse effect on its financial condition, results of operations or cash flows.

While an incident such as a Wells Notice generally raises concerns, issues regarding this notice and the vulnerabilities to information security incidents are universal, and insurers are not immune to potential information technology security lapses. As for compliance, First American believes its disclosures were accurate and that all customer information is safeguarded currently. Since the incident was reported, management believes all necessary remedial actions have been implemented to ensure this vulnerability was corrected and that no evidence of any widespread damages have resulted from this incident. AM Best will continue to actively monitor this situation.

The following companies are the members of the First American Title Insurance Group:

  • First American Title Insurance Company

  • First American Title Insurance Company of Australia Pty Limited

  • First American Title Insurance Company of Louisiana

  • First European Title Insurance Company Limited

  • First Title Insurance plc

  • Ohio Bar Title Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201028006210/en/

Contacts

Kourtnie Beckwith
Financial Analyst

+1 908 439 2200, ext. 5124
kourtnie.beckwith@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Fred Eslami
Associate Director
+1 908 439 2200, ext. 5406
fred.eslami@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com